(a) Instruments. Securities to be issued pursuant to the provisions of this subpart may be in registered or bearer form. Each security shall have terms acceptable to the Association and shall specify its principal amount, the interest rate, and the maturity date, and the securities may include call provisions and other characteristics depending on current market conditions.

(b) Issue amount. Until further authorization is given, each issue of guaranteed securities must be in a minimum face amount of $100 million, and no single maturity of an issue may be in face amount less than $100 million unless the total issue exceeds $200 million. The total of the outstanding principal balances of the mortgages upon which any issue is originally based and backed must be at least equal to 100 percent of the face amount of the issue of guaranteed securities. Such ratio as may be required by the governing trust arrangements, between mortgages and other pooled assets and securities outstanding at any one time, shall be maintained, subject to adjustment with the approval of the Association in accord with such trust arrangements.

(c) Face amount of securities. The face amount of any security cannot be less than $25,000.

(d) Transferability. Securities are transferable but, if registered, are transferable, as to the Association and the issuer, only on the books of a fiscal agent as shall be agreed upon by the Association and the issuer.

(e) Treasury approval. Issues of $100 million or larger will be subject to approval of the Secretary of the Treasury.

§ 390.27 Mortgages.

Guaranteed securities issued under these provisions must be based on and backed by mortgages pooled under trust arrangements satisfactory to the Association. Such mortgages must:

(a) Be insured under the National Housing Act or title V of the Housing Act of 1949, or insured or guaranteed under the Servicemen's Readjustment Act of

1944 or chapter 37 of title 38, United States Code.

(b) Have been insured or guaranteed no longer than 12 months prior to the date on which the Association issues its commitment to guarantee the securities;

and

(c) Meet such other standards of acceptability and eligibility as may be prescribed by the Association from time to time for the issue of mortgage-backed securities of the bond type. But with respect to any particular issue of securities, the related mortgages shall meet only such standards as may be in effect or imposed at the time of the issuance of the related commitment to guarantee. § 390.29 Trust arrangements.

(a) The pool of mortgages, together with all proceeds thereof and all other assets backing each issue of "bond-type" securities, shall be held and administered by a corporate trustee which is subject to Federal or State regulation and which is acceptable to the Association. The issuer of the securities may qualify as trustee;

(b) The trust agreement which will be executed by the issuer, the trustee and the Association and which may be reopened subject to the approval of the Association, will provide for:

(1) The issuance of the securities, including the size or other ceilings of the issuance or issuances, the nature and provisions of the securities, the principles and methods of sale and distribution, and other material matters pertaining to issuance;

(2) Conveyance of the pooled mortgages to the trustee, in trust, to provide the base and backing for the securities and otherwise for purposes of the trust arrangements, and custody of mortgage documents;

(3) Administration of the trust, to include servicing and retirement of the securities, and servicing of the mortgages through their payment or other liquidation;

(4) Principles and methods with respect to reporting requirements, the handling of losses realized from the pooled mortgages, defaults by the issuer, and other appropriate matters;

(5) Timely payment of principal and interest in accord with the terms of securities issued;

(6) Segregation of the cash and other assets flowing or resulting from the pooled mortgages;

(7) Reinvestment of accumulations of

The Association may impose application and guaranty fees, which may vary with relation to the size or risk of the guaranty transaction undertaken. Subpart C-Miscellaneous Provisions § 390.35 Audits and reports.

The Association may at any time audit the books and examine the records of any issuer, mortgage servicer, trustee, or agent or other person bearing on its guaranty of mortgage-backed securities, and may require periodic reports from such persons.

§ 390.37 Applications.

Applications for guaranty should be submitted to the Association's home office located at 451 Seventh Street SW., Washington, D.C. 20414.

(d) Commissioner. The Community Facilities Commissioner, Community Facilities Administration, Office of the Administrator, Housing and Home Finance Agency.

(e) State. Any one of the several States of the United States, the District of Columbia, Alaska, Hawaii, or Puerto Rico.

(f) Public agencies. The States and their agencies and political subdivisions established by law and which have basic authority to construct public works.

agency (g) Applicant. Any public which makes application for Federal Assistance under the act and this subpart.

(h) Application. The document or documents, including amendments and communications, filed with the Administration by the applicant for an advance of funds for plan preparation.

(i) Plan preparation. Architectural engineering, and economic investigations and studies, surveys, designs, plans, working drawings, specifications, estimates of costs, procedures and other planning activities in advance of the construction of specific public works.

(j) Advances. The Federal funds advanced under the authority of the act and this subpart to any public agency to aid in financing the cost of preparation.

plan

(k) Agreement. The document executed by the applicant and the Administration covering the terms and conditions of an advance and the repayment thereof.

§ 490.2 Purpose of the act.

The act authorizes the Housing and Home Finance Administrator to make loans or advances to public agencies in order to encourage and to assist them in completing the plan preparation of useful public works, thereby developing a reserve of non-Federal public works which can be placed under construction with a minimum of delay as circumstances warrant.

§ 490.3 Advances.

(a) The act authorizes assistance in the form of loans or advances of Federal funds, but in order to simplify the administration of the act this subpart limits assistance to advances.

(b) The making of an advance does not in any way commit the Congress of the United States to appropriate funds

to undertake any public works planned with the proceeds of such advance.

(c) The applicant in accepting an advance for plan preparation agrees that it will not accept any loan from any Federal agency for the construction of the public work planned in whole or in part with such advance unless the making of such construction loan shall be specifically authorized by Federal law.

(d) An advance shall not be required to be repaid until the construction of the public work for which the advance is made is undertaken or started as provided in con§ 490.12. Until such struction is undertaken or started the advance shall not be deemed by the United States to be a debt or obligation within the meaning of any constitutional or statutory limitation.

(e) No interest charge shall be made for any advance.

(f) Advances shall not be approved to reimburse the applicant for any disbursement made or to defray any costs incurred prior to the approval of an application. Funds advanced shall not be used to defray the cost of any contract entered into by the public agency prior to the approval of the application for an advance if in such contract the public agency has agreed to finance the plan preparation from other funds.

(g) Funds advanced shall not be used for the acquisition of land or any interest in land.

§ 490.4

Apportionment of funds.

Funds appropriated for the making of advances under the act shall be apportioned among the several States in the following manner:

(a) Ninety percent in the proportion which the population of each State bears to the total population of all the States, as shown by the Federal census of 1940;

(b) States whose apportionments do not total one-half of 1 percent of the total amount appropriated for advances after the above distribution shall have their apportionments increased to that percentage from the 10 percent available for discretionary use; and

(c) The balance of the funds as may be determined by the Commissioner with the approval of the Administrator.

§ 490.5 Submission of applications.

Applications for advances for plan preparation shall be submitted to the Regional Offices of the Office of the Ad

ministrator, Housing and Home Finance Agency.

§ 490.6 Types of public works.

(a) Applications for advances for the plan preparation of the following types of public works of States and other nonFederal public agencies are eligible under the provisions of the act:

(1) Highways, roads and streets, for which other Federal funds are not legally available, which shall consist of highways, roads, and urban streets, including such items as culverts, drainage facilities, sidewalks, curbs and gutters, guard rails and guard walls, road and street lighting, traffic control facilities, roadside landscaping, and other similar work.

(2) Bridges, viaducts and grade separations, for which other Federal funds are not legally available, which shall consist of bridges, viaducts, grade separation structures, grade crossing eliminations, tunnels, and other similar work.

(3) Airports, for which other Federal funds are not legally available, which shall consist of all types of public airport buildings and landing facilities, including such items as terminal buildings, hangars, administration buildings, grading, leveling and seeding of land fields, construction of runways, taxi strips, aprons, landing platforms, seaplane ramps, drainage facilities, lighting facilities, airway markers and beacons, and other airport and airway facilities.

(4) Sewer, water, and sanitation facilities, which shall consist of sewer systems, including such items as sewage treatment and disposal plants, sanitary sewers, storm sewers, and drainage systems; water systems, including such items as water supply and storage, water treatment plants, pumping stations, water distribution and irrigation systems; and sanitary facilities such as incinerator plants, malarial control facilities, and other similar work.

(5) Schools and other educational facilities, which shall consist of public school facilities such as school buildings, administration buildings, auditoriums, gymnasiums, and dormitories; public libraries: and other educational facilities.

(6) Hospitals and health facilities, which shall consist of public hospitals, nurses' homes, clinics, health centers and laboratories, sanitariums and other health facilities.

(7) Other public buildings, which

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shall consist of city halls, courthouses, institutional buildings, administrative buildings, police and fire stations, armories, garages, storage buildings, com-. munity buildings, and other public buildings not included under subparagraphs (3), (5), (6), (8), and (9) of this paragraph.

(8) Parks and other recreational facilities, which shall consist of public parks, playgrounds, fairgrounds, and other recreational facilities, not included under subparagraph (5) of this paragraph, including such items as recreation centers, gymnasiums, athletic fields, swimming pools, tennis courts, and other such recreational facilities.

(9) Miscellaneous public facilities, which shall consist of other types of public facilities such as transportation facilities, port facilities, electric power plants, and distribution systems, public docks, wharves and piers, non-Federal river and harbor improvements, and other miscellaneous public facilities.

(b) The following types of public works are not eligible for assistance under the provisions of the act:

(1) Public housing projects of Federal, State or local housing agencies or authorities.

(2) Federal projects of Federal departments, agencies, and instrumentalities.

(3) Federal-aid and State highway projects of the Federal Public Roads. Administration and the State Highway Departments.

$490.7 Conformity to over-all plan.

Each application for an advance for plan preparation shall contain evidence that the public work to be planned conforms to an over-all State, local or regional plan approved by competent. State, local or regional authority. Where no legally authorized over-all planning agency exists, evidence of the approval of the proposed public work by the authority having jurisdiction thereof shall be required.

§ 490.8 Arrangements for construction.

Each application shall contain evidence that the applicant has basic legal authority to finance and construct the public works, and that it plans and reasonably expects to initiate the construction of the proposed public works within 4 years after the receipt of the advance and to prosecute the public works to completion.